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Cyprus’ Response to a Turkish Natural Gas Pipeline to Israel

by erpic-manager on June 14, 2017 in Uncategorized with No Comments

Cyprus’ Response to a Turkish Natural Gas Pipeline to Israel
George Chr. Pelaghias
June 2017

Introduction

It has been reported for several years that Turkish official and commercial circles have approached Israeli authorities, and Israeli energy companies, with proposals regarding the purchase of Israeli natural gas found in the Israeli Exclusive Economic Zone (“EEZ”). Such proposals include the construction of a deep-water pipeline to the Turkish coast. In the event that such proposals materialise, and a pipeline is in fact built, there is a high probability that it will have to cross Cyprus’ EEZ.  Hereunder, we examine the rights of the Republic of Cyprus regarding this matter.

Cyprus’ Resonse to a Turkish Natural Gas Pipeline to Israel.pdf



Noble Energy Makes Bloc 12 Discovery Offshore Cyprus

by erpic-manager on March 23, 2017 in Uncategorized with No Comments

Noble Energy Makes Bloc 12 Discovery Offshore Cyprus
Energy Brief
7th January 2012

Houston-based Noble Energy on 28 December announced the discovery of 5 to 8 trillion cubic feet (tcf) of natural gas in Block 12 offshore Cyprus. Noble said in a statement that the Cyprus A-1 well encountered some 94 meters of net natural gas pay in multiple high-quality Miocene sand. Using the Homer Ferrington semi-submersible rig, the well was drilled to a depth of 5,860 meters in a water depth of 1,689 meters. The company, which has made several significant discoveries offshore Israel, said “results from drilling, formation logs and initial evaluation work indicate an estimated gross resource range of 5 to 8 tcf, with a gross mean of 7 tcf (198 billion cubic meters).” Noble said further appraisal of the field, which covers around 100 square kilometres, is needed prior to its development.
 
“We are excited to announce the discovery of significant natural gas resources in Cyprus on Block 12,” Charles D Davidson, Chairman and CEO of Noble, said in the statement. “This is the fifth consecutive natural gas field discovery for Noble Energy and our partners in the greater Levant basin, with total gross mean resources for the five discoveries currently estimated to be over 33 tcf (934 bcm). This latest discovery in Cyprus further highlights the quality and significance of this world-class basin,” he said.
 
In Cyprus the discovery was well received by the Greek-Cypriot population and media, which has shown considerable excitement over the prospect of potential hydrocarbon deposits offshore. Demetris Christofias, President of the Republic of Cyprus, which is recognized internationally as the sovereign government on the divided island, called the discovery “historic,” saying that it “opens great potential for Cyprus and its people, which with prudence and in a spirit of collectiveness we will utilize in the service of public interest.” He added: “New favorable economic prospects have opened for the future of the country. Both the present as well as the next generations will benefit.”
 

The Cyprus A-1 well was the first ever drilled offshore Cyprus, which imports all of its energy needs and still uses heavy fuel oil for power generation. Noble Energy and its key partner offshore Israel, the Delek Group, have proposed to the Cypriot government the creation of a LNG facility on the southern coast of the island with a capacity of 15 million tons/year. Such a facility would be designed to process not only Cypriot gas but also that in the Leviathan and Tamar gas fields offshore Israel. The Israeli fields hold reserves of 17 tcf and 9 tcf respectively. The Cyprus A-1 discovery is located near the maritime delimitation line with Israel, with the Leviathan and Tamar fields located less than 100 kilometers away. The Block 12 well is located some 180 kilometers south of the island.

Exploration work in Block 12 sparked a mini-crisis with Turkey during the second half of 2011 after the Cyprus Energy Department announced last August that Noble was scheduled to begin drilling in October. Turkey, which invaded Cyprus in 1974 and which continues a military occupation of some 40% of the island, demanded that exploration work stop until a settlement between the divided Greek-Cypriot and Turkish-Cypriot communities is agreed. Ankara’s argument is that the government of the Republic of Cyprus, which is a member of the United Nations and the European Union, does not represent the Turkish-Cypriots, who, Ankara reasons, have an equal right to the island’s natural resources.

The start of drilling in late September brought profound protests from Turkey, which sent warships into the Cyprus exclusive economic zone (EEZ), along with an ageing seismic exploration vessel. Turkey and the Turkish-Cypriot administration signed in September in New York during the UN General Assembly a document demarcating the northern waters between the island and Turkey’s southern coast, and in November the two signed an agreement giving Turkey’s state-owned Turkish Petroleum (TPAO) a license to explore offshore Cyprus in an area that includes Block 12 and much of the Cyprus EEZ.

The Greek-and Turkish-Cypriot sides are due to meet with the UN Secretary General in New York in late January in a last-ditch attempt to find a settlement to the 37-year-old ‘Cyprus Problem.’ After three years of negotiations, the two sides have failed to make any major advance towards a resolution.

Commenting on the discovery in Block 12, President Christofias said the gas find “can and should become a tool to promote peace and cooperation in the region. The exploitation of hydrocarbons can become an incentive for a solution to the Cyprus Problem, a solution that will terminate the illegal occupation and the illegal colonization that will reunify our country and our people, and will restore the human rights and the basic freedoms of our people, Greek-Cypriots and Turkish-Cypriots alike.”

Meanwhile, the Ministry of Commerce and Industry, which oversees the Energy Department, is preparing to launch the island’s second licensing round. It will include the 12 remaining blocks in the Cyprus EEZ. The Energy Department has revised the terms of the model production sharing agreement and the documents are to be delivered to the European Commission in early January for translation and subsequent publication in the EU’s official gazette. The round is expected to be announced within the next few weeks. Cyprus had been waiting for the results from the Noble well before launching the bidding round, which is expected to attract the participation of some major international oil companies.

During the course of 2011, relations between Cyprus and Israel have improved with a particular focus on energy cooperation. Minister of Commerce and Industry Praxoulla Antoniadou is due to visit Israel in late January for further discussion on the topic. The LNG plant in Cyprus proposed by Noble Energy and Delek Group is expected to be a near the top of the agenda.



Curtains for Nabucco, or Only Intermissions?

by erpic-manager on March 23, 2017 in Uncategorized with No Comments

Curtains for Nabucco, or Only Intermissions?
Energy Brief
16th January 2012

With the Trans Anatolian Gas Pipeline (TANAP) and the South East Europe Pipeline (SEEP) now on the table as proposals through which to convey Azerbaijan’s Shah Deniz Stage 2 (SD2) gas across Turkey to Europe, the question has to be: is there, could there be a chance for the Nabucco gas pipeline to remain as the core of the Southern Corridor?

Complicating the situation further is the agreement between Turkey and Russia that allows the latter to build the uber-expensive South Stream gas pipeline across the Black Sea. For concessions on prices and the take-or-pay factor, Ankara gave Moscow the go-ahead on a right- of-way through Turkey’s offshore territory. The jury is still out as to whether Ankara’s decision will prove to be to its benefit in its quest to be the prime conveyor of gas to Southern Europe.

While it has seemed like a good idea all along, Nabucco faces a bigger challenge now from TANAP and SEEP than it ever did from South Stream, which with a planned capacity of 63 billion cubic meters/year (bcm/y) was designed to supersede Nabucco at every opportunity. With a design capacity of 31 bcm/y, Nabucco was deemed too large for viability with only 10 bcm/y of SD2 gas available for transport to Europe. With sanctions putting Iran out of the picture as a source of gas supply to Europe, Nabucco consortium members OMV, MOL and RWE turned to Iraqi Kurdistan as another source to fill the pipeline.

To make the pipeline more attractive, Nabucco partners proposed extending the pipeline as far east as Baku and further west into Central Europe. The extension to Baku was mindful of Nabucco’s real goal – gas supplies from Turkmenistan. But without a deal to build the long-elusive Trans-Caspian Gas Pipeline, which is strongly opposed by Russia and Iran on both political grounds and for reasons of gas market competition, shipments of Turkmen gas through Nabucco will not happen.

At this point it appears that only a China-like deal that would send 30 bcm/y of Turkmen gas through Nabucco to Europe would put the project back on its feet. The European Union last September sanctioned the effort to negotiate a “legally binding treaty” between it, Azerbaijan and Turkmenistan for the construction of the TCGP, but there has been no report of progress.

Throughout its existence, Nabucco has sought to cross all the ‘t’s and dot all the ‘i’s. It has all its intergovernmental agreements in place, and while the cost of the project now probably goes well beyond the original €7.9 billion, it is still probably a bargain compared to South Stream, which is being estimated by the media at €25-30 billion. Russia must be asking itself just how much gas it is going to have to sell in order to cover the cost of maintaining a firm hand on the European market with its Black Sea pipeline adventure.

Now with TANAP, an 80%-20% joint venture between Azerbaijan’s Socar and Turkey’s Botas, on the scene, it is unlikely that Nabucco can hope to be awarded the contracts to carry SD2 gas. TANAP is carry the full 16 bcm/y that SD2 will produce, with 6 bcm/y promised to Turkey’s domestic market.

Furthermore, the fact that SEEP–proposed by Shah Deniz operator BP–will essentially follow the planned Nabucco route through Eastern Europe and that its shareholding will essentially be open to Shah Deniz partners must be discouraging to the Nabucco partners. Perhaps the only bright note for them would be if they – after having spent millions on developing Nabucco as a project – would be given the option to buy into TANAP and into SEEP, which has an initial design to carry 10 bcm/y.

TANAP and SEEP combined hold little promise for the Greek-Italian Interconnector-Greece-Italy (IGI) Poseidon gas pipeline or the Trans Adriatic Pipeline (TAP). While both have been included in the Southern Corridor scenario, both have been on the periphery and both planned to carry gas to Italy, not disperse it more widely into Eastern and Central Europe.

Should SEEP not be built in conjunction with TANAP, which is expected to cost $5 billion or more and come into operation in 2017 when SD2 comes on – stream, then either IGI Poseidon or TAP will likely be awarded the gas contracts awaited from Azerbaijan.

There is little doubt now that Azerbaijan will decide in favor of its own project as the pipeline through which it will chose to carry SD2 gas across Turkey. Nabucco, IGI Poseidon (part of the Interconnector-Turkey-Greece-Italy project) were made to jump through a number of hoops prior to their submission of bids for gas contracts last October. In the end it appears that Baku has decided to do for itself what it doubted that others could do for it. And for Ankara, TANAP is a message to the EU that it too can take an independent course.

Even as more gas supplies come on-stream in Azerbaijan in the future, there are questions as to whether there will ever be enough Azeri gas in the future. The country’s energy minister, Natiq Aliyev, has said TANAP’s initial capacity of 16 bcm/y can be expanded to 24 bcm/y.

Meanwhile, the political situation in Iraq is deteriorating and spreading to the autonomous Kurdistan Regional Government (KRG), making, at this time, the future of gas exports from northern Iraq more questionable than ever–another star in the wrong place for Nabucco.

It is not quite clear if this is the finale for Nabucco or just an intermission. The project has indeed been like a long, melodramatic opera. There have been moments of enduring love and times of harrowing melancholy. It has at times been panned by the critics and applauded by the crowd, and the cast has put in a strong performance throughout its tour of Europe and the Caucasus. Without a doubt, Nabucco set the stage.



Curtains for Nabucco, or Only Intermissions?

by erpic-manager on March 22, 2017 in Uncategorized with No Comments

Curtains for Nabucco, or Only Intermissions?
Energy Brief
16th January 2012

With the Trans Anatolian Gas Pipeline (TANAP) and the South East Europe Pipeline (SEEP) now on the table as proposals through which to convey Azerbaijan’s Shah Deniz Stage 2 (SD2) gas across Turkey to Europe, the question has to be: is there, could there be a chance for the Nabucco gas pipeline to remain as the core of the Southern Corridor?
Complicating the situation further is the agreement between Turkey and Russia that allows the latter to build the uber-expensive South Stream gas pipeline across the Black Sea. For concessions on prices and the take-or-pay factor, Ankara gave Moscow the go-ahead on a right-of-way through Turkey’s offshore territory. The jury is still out as to whether Ankara’s decision will prove to be to its benefit in its quest to be the prime conveyor of gas to Southern Europe.
While it has seemed like a good idea all along, Nabucco faces a bigger challenge now from TANAP and SEEP than it ever did from South Stream, which with a planned capacity of 63 billion cubic meters/year (bcm/y) was designed to supersede Nabucco at every opportunity. With a design capacity of 31 bcm/y, Nabucco was deemed too large for viability with only 10 bcm/y of SD2 gas available for transport to Europe. With sanctions putting Iran out of the picture as a source of gas supply to Europe, Nabucco consortium members OMV, MOL and RWE turned to Iraqi Kurdistan as another source to fill the pipeline.
To make the pipeline more attractive, Nabucco partners proposed extending the pipeline as far east as Baku and further west into Central Europe. The extension to Baku was mindful of Nabucco’s real goal–gas supplies from Turkmenistan. But without a deal to build the long-elusive Trans-Caspian Gas Pipeline (TCGP), which is strongly opposed by Russia and Iran on both political grounds and for reasons of gas market competition, shipments of Turkmen gas through Nabucco will not happen.
At this point it appears that only a China-like deal that would send 30 bcm/y of Turkmen gas through Nabucco to Europe would put the project back on its feet. The European Union last September sanctioned the effort to negotiate a “legally binding treaty” between it, Azerbaijan and Turkmenistan for the construction of the TCGP, but there has been no report of progress.
Throughout its existence, Nabucco has sought to cross all the ‘t’s and dot all the ‘i’s. It has all its intergovernmental agreements in place, and while the cost of the project now probably goes well beyond the original €7.9 billion, it is still probably a bargain compared to South Stream, which is being estimated by the media at €25-30 billion. Russia must be asking itself just how much gas it is going to have to sell in order to cover the cost of maintaining a firm hand on the European market with its Black Sea pipeline
adventure.
Now with TANAP, an 80%-20% joint venture between Azerbaijan’s Socar and Turkey’s Botas, on the scene, it is unlikely that Nabucco can hope to be awarded the contracts to carry SD2 gas. TANAP is carry the full 16 bcm/y that SD2 will produce, with 6 bcm/y promised to Turkey’s domestic market.
Furthermore, the fact that SEEP–proposed by Shah Deniz operator BP–will essentially follow the planned Nabucco route through Eastern Europe and that its shareholding will essentially be open to Shah Deniz partners must be discouraging to the Nabucco partners. Perhaps the only bright note for them would be if they – after having spent millions on developing Nabucco as a project – would be given the option to buy into TANAP and into SEEP, which has an initial design to carry 10 bcm/y.
TANAP and SEEP combined hold little promise for the Greek-Italian Interconnector-Greece-Italy (IGI) Poseidon gas pipeline or the Trans Adriatic Pipeline (TAP). While both have been included in the Southern Corridor scenario, both have been on the periphery and both planned to carry gas to Italy, not disperse it more widely into Eastern and Central Europe.
Should SEEP not be built in conjunction with TANAP, which is expected to cost $5 billion or more and come into operation in 2017 when SD2 comes on-stream, then either IGI Poseidon or TAP will likely be awarded the gas contracts awaited from Azerbaijan.
There is little doubt now that Azerbaijan will decide in favor of its own project as the pipeline through which it will chose to carry SD2 gas across Turkey. Nabucco, IGI Poseidon (part of the Interconnector-Turkey-Greece-Italy project) were made to jump through a number of hoops prior to their submission of bids for gas contracts last October. In the end it appears that Baku has decided to do for itself what it doubted that others could do for it. And for Ankara, TANAP is a message to the EU that it too can take an independent course.
Even as more gas supplies come on-stream in Azerbaijan in the future, there are questions as to whether there will ever be enough Azeri gas in the future. The country’s energy minister, Natiq Aliyev, has said TANAP’s initial capacity of 16 bcm/y can be expanded to 24 bcm/y.
Meanwhile, the political situation in Iraq is deteriorating and spreading to the autonomous Kurdistan Regional Government (KRG), making, at this time, the future of gas exports from northern Iraq more questionable than ever–another star in the wrong place for Nabucco.
It is not quite clear if this is the finale for Nabucco or just an intermission. The project has indeed been like a long, melodramatic opera. There have been moments of enduring love and times of harrowing melancholy. It has at times been panned by the critics and applauded by the crowd, and the cast has put in a strong performance throughout its tour of Europe and the Caucasus. Without a doubt, Nabucco set the stage.


Netanyahu Visits Cyprus for Energy Talks

by erpic-manager on March 21, 2017 in Uncategorized with No Comments

Netanyahu Visits Cyprus for Energy Talks
Energy Brief
18th February 2012

Israeli Prime Minister Benjamin Netanyahu arrived in Cyprus on February 16 for talks with Cypriot President Demetris Christofias designed to further closer cooperation between the two East Mediterranean states in the development of their recent offshore natural gas discoveries. His is the first visit by an Israeli prime minister to Cyprus.

“The one area we are looking into now is the field of energy, gas findings,” Mr. Netanyahu said in Nicosia. “We are looking within the next two months to complete a joint study to see how we can transfer this cooperation in practical terms.”

The US firm Noble Energy has made several significant discoveries in the Israeli and Cypriot offshore. Last December Noble announced that it had discovered 7 trillion cubic feet of natural gas in Cyprus’ Block 12. Noble’s discoveries offshore Israel amount to some 25 trillion cubic feet. Together, the reserves add up to more than 900 billion cubic meters and more exploration work is planned. Last year, Noble and its Israeli partner, the Delek Group, proposed to the Cyprus government the construction of an LNG plant at Vassilikos on the island’s southern coast for the purpose of processing and exporting Israeli and Cypriot gas.

“We have to examine the question of LNG facilities,” Mr Netanyahu said, “this could be in the direction of Europe through Cyprus or could be in the direction of Asia through Israel. So all these possibilities have to be examined in terms of feasibility, in terms of economic sense, in terms of investment.”

Mr. Netanyahu’s visit came only days after Cyprus announced the opening of its second offshore licensing round, in which it is opening 12 blocks located south of the island to tender from international oil companies.

Turkey voiced its objection to the bidding round, claiming that it ignores the rights of Turkish-Cypriots and threatened to take steps to prevent foreign companies from exploring in areas where it has interests. Ankara has previously described the exploration activity carried out in the Eastern Mediterranean by Israel and Cyprus as illegal. Cyprus has replied that it has every right to explore in its territorial waters and will continue to do so. It has received international support in this respect.

Mr. Netanyahu’s visit to Cyprus follows a decline in Israel’s relations with Turkey over the last two years in the wake of Israel’s interception of a Turkish-led humanitarian flotilla meant to break the blockade of the Gaza Strip. Nine Turkish citizens died when Israeli commandoes boarded the ships and Ankara has demanded an apology that Israel has refused to extend.

Speaking to reporters during a press conference with Mr. Netanyahu, Cypriot President Christofias said the common goal of Cyprus and Israel “is the best possible utilization of these reserves for the benefit of the two peoples of the two countries, as well as for the consolidation of peace and stability in the region.”

Responding to comments made by Ankara, Mr. Christofias said: “It is not us that threatens Turkey. It is Turkey that threatens us–this is the problem. The true troublemaker is Turkey and not the cooperation between Israel and Cyprus.”



Cyprus Launches 2nd Licensing Round

by erpic-manager on March 21, 2017 in Uncategorized with No Comments

Cyprus Launches 2nd Licensing Round
Energy Brief
18th February 2012

The Republic of Cyprus has launched its second licensing round, making 12 blocks within its offshore exclusive economic zone (EEZ) available for bidding to international oil companies. The announcement first appeared in the Official Journal of the European Union on February and was placed on the website of the Ministry of Commerce, Industry and Tourism (www.mcit.gov.cy) on February 13. Companies have 90 days to submit their bids. Evaluation of the applications is expected to take place over a six month period, and blocks could be awarded before the end of the year.

Following the discovery in December by Noble Energy of around 7 trillion cubic feet of natural gas inBlock 12, as well as the numerous and sizeable discoveries made by Houston-based Noble in the Israeli offshore, the Cyprus bidding round is expected to attract considerably more attention than the first round in 2007. While Cyprus made 11 blocks open for bidding then, few bids were placed and only Block 12 was awarded.

Noble Energy holds a 70% working interest in Block 12 after a farm-in by two subsidiaries of Israel’s Delek Group, Noble’s main partner in the Israeli offshore. Noble is assessing the results of the Cyprus A-1 well, the first offshore well ever drilled in Cyprus, and is looking to carry out appraisal drilling during the latter half of 2012.

As expected, Turkey voiced its objection to the launch of the licensing round through a statement from its foreign ministry. Ankara holds that the government of Cyprus does not have the right to explore or exploit hydrocarbons in Cypriot waters because the Greek-Cypriot republic does not represent Turkish-Cypriots, who reside in the northern side of the island, which has been under Turkish military occupation since 1974.

In the statement, Ankara said: “We protest this unilateral step, which is both irresponsible and provocative, taken by the Greek-Cypriots despite all warning.” The statement said that the Cyprus EEZ overlaps areas claimed by Turkey as part of its continental shelf and that it also violates an agreement that the Turkish-Cypriot administration signed with the Turkish Petroleum Company (TPAO) giving TPAO the right to explore in Cypriot waters that are part of the EEZ.

Turkey “will give every support to the [Turkish-Cypriot administration] to prevent possible violations of Turkish-Cypriot concession blocks and thus to protect their rights and interests in maritime areas, the Turkish Foreign Ministry statement said. It also warned foreign oil companies to avoid exploration in the areas that Turkey claims as its own in the Mediterranean.

The Republic of Cyprus is a member of the European Union and is a signatory of the UN Convention on the Law of the Sea (UNCLOS). The EU, UN, US, Russia and others have expressed their support for Cyprus’s right to explore for hydrocarbons in its EEZ.

The Cyprus Foreign Minister on February 17 replied to Ankara’s statements saying that Cyprus would proceed with the exploitation of its natural wealth, the Cyprus Mail reported. “The Republic of Cyprus is determined to proceed in exploiting its natural wealth, especially in relations with hydrocarbons, for the economic development and prosperity of its people, without discrimination.” It added: “Turkey once more proves that its aim is not the protection of the rights of Turkish-Cypriots, as it professes, since it is claiming for itself a significant part of Cyprus’ western, southern and northern EEZ.”



Azerbaijan Looks to TANAP Agreement with Turkey

by erpic-manager on March 21, 2017 in Uncategorized with No Comments

Azerbaijan Looks to TANAP Agreement with Turkey
Energy Brief
19th February 2012

The head of Azerbaijan’s state-owned oil and gas company Socar, Rovnag Abdullayev, said last week that agreements with the government of Turkey regarding the newly-proposed Trans Anatolian Gas Pipeline (TANAP) should be signed in March or April.

Socar and Turkish pipeline company Botas announced in December 2011 a plan to construct a pipeline across Turkey that would carry gas produced in Azerbaijan’s Shah Deniz gas field in the Caspian Sea to Europe. The project will likely be the end of the EU-backed Nabucco Gas Pipeline project, which since 2002 has been proposing to carry natural gas from Azerbaijan, Central Asia and the Middle East to Southeast and Central Europe.

With Azerbaijan and Turkey joining up to provide a system to carry Azeri gas as far as the Bulgarian border, TANAP is expected to receive the contracts from the Shah Deniz partners to transport the 16 billion cubic meters per year (bcm/y) that the Shah Deniz Stage 2 (SD2) is scheduled to produce in 2017. Of this, Turkey would receive 6 bcm/y and the remaining 10 bcm/y would be shipped into Europe. Turkey already receives 6 bcm/y of Shah Deniz gas from the first stage of the project.

Speaking in Istanbul on 13 February, Mr. Abdullayev said the intergovernmental and country host agreements concerning TANAP could be signed in a couple months, while Turkish officials have stated that construction could begin within two years.

TANAP is estimated to cost $5-7 billion, considerably less than the current unofficial cost estimate of around $12 billion for Nabucco. First reports on TANAP capacity were put at 10-16 bcm/y – sufficient to cover SD2 output, but new reports in the media are placing initial capacity for TANAP at 30 bcm/y with the possibility of expansion in the years ahead. Azerbaijan is expected to be producing enough gas by 2025 to export 50 bcm/y. That suggests that Socar will likely expand TANAP capacity for any future gas exports traveling to Europe, thus giving the pipeline the central role in the Southern Corridor and canceling out any opportunity for an alternative pipeline across Turkey, such as Nabucco, to become a feasible project, barring a major development between the EU, Azerbaijan and Turkmenistan on a Trans Caspian Gas Pipeline.

One of Nabucco’s prime shortcomings has been its failure to secure sources of supply for its 31 bcm/y capacity. This, in turn, led to it not being able to secure financing. Besides looking for supplies from Azerbaijan, Nabucco had hoped to secure gas supplies from Turkmenistan and Iraq. While these options remain future possibilities, right now they look like long shots.

Socar is to hold 80% of TANAP while Turkey, through Botas and its upstream petroleum company TPAO, will hold 20%. Mr. Abdullayev said the project would be open to other partners and it is likely that European shareholders in Shah Deniz and possibly some of those involved in Nabucco will look to join. Germany’s RWE, a late-comer to Nabucco, has expressed an interest in TANAP.

“We are talking to BP, Statoil and Total and want their gas to be in this project,” Mr. Abdullayev said, “but Socar will remain as the main shareholder, leader and operator of this project.” Reuters quoted a Turkish energy ministry official as saying: “Socar wants to remain the consortium leader but may be willing to include companies who can strengthen the project. Major energy companies are interested in TANAP, both from Nabucco and the Shah Deniz 2 consortium.”

While it appears that the likely project to carry SD2 gas across Turkey will be TANAP, there is still the question of which consortium will be selected to convey the gas into Europe. The Interconnector-Greece-Italy (IGI) Poseidon project is designed to carry 10 bcm/y of gas across northern Greece and the Adriatic Sea to southern Italy. It also holds the possibility of shipping gas into Southeast Europe through the yet to be completed 5 bcm/y-capacity Interconnector-Greece-Bulgaria (IGB) project.

The Trans Adriatic Pipeline (TAP) is also designed to carry 10 bcm/y (and later 20 bcm/y) to Italy and the southern Balkans. There is also the South East Europe Pipeline (SEEP) proposed last autumn by Shah Deniz operator BP only days before the deadline to contract submissions for SD2 gas. SEEP has yet to come up with a concise proposal, but could be given serious attention as an alternative. SEEP would run from the Turkish/Bulgarian border to Austria, roughly following the proposed Nabucco route.

In the midst of this, Nabucco is reported to be planning a scaled down model of itself in an attempt to stay alive. The consortium plans to cut its capacity by more than half and make the Bulgarian border its starting point.

The situation could result with Shah Deniz partners awarding the SD2 contracts in stages. The changing landscape of pipeline politics with regard to the Southern Corridor has caused a series of delays in awarding the SD2 contracts. But with TANAP seen at this point as the most likely winner of those contracts, the partners may decide to select TANAP and then give further consideration to which pipeline project will win the contracts for carrying SD2 gas into Europe.



Nabucco Rethinks Itself

by erpic-manager on March 21, 2017 in Uncategorized with No Comments

Nabucco Rethinks Itself
Energy Brief
29th February 2012

The Nabucco Gas Pipeline International consortium is reported to be reassessing its role as a major gas importer into Europe now that it appears to have been trumped by the gas pipeline plan unveiled by Turkey and Azerbaijan last December.

Nabucco is now considering a plan that would have it build a pipeline from the Bulgaria – Turkey border to the Central European Gas Hub in Baumgarten, Austria, following Nabucco’s proposed route through Bulgaria, Romania, Hungary and Austria. The plan to build a new pipeline, with branches beginning at the Georgian and Iraqi borders in Turkey, would be redrawn, with the stretch across Turkey eliminated.

Late last year, following the submission of bids on October 1 by the three consortia competing for Azerbaijan’s Shah Deniz Stage 2 (SD2) gas shipments, Azerbaijan’s state – owned oil and gas company Socar and Turkey’s Petroleum Pipelines Corporation (Botas) announced that they had formed an 80:20 partnership to build a 10 billion cubic meter/year (bcm/y) across Turkey from the Georgian to the Bulgaria border. The Trans Anatolian Pipeline (TANAP) would have an initial capacity of 10 bcm/y – the amount of gas that SD2 will have available for export to Europe – and Turkish officials have said the pipeline could be expanded to 30 bcm/y. Azerbaijan is planning to expand its natural gas production to 50 – 55 bcm/y by 2025.

The announcement virtually blew the 31 bcm/y Nabucco project out of the water. Now estimated to cost €12 billion, Nabucco had been considered too much pipeline for the amount of gas available. Unable to secure gas from Azerbaijan, the project in years previously had turned to lining up gas projects in Iraqi Kurdistan, but no gas export deals were ever signed.

The Shah Deniz partners, led by BP and Statoil, are expected to award the gas shipment contract by the middle of this year. Other contenders for the 10 bcm/y from the Caspian is the Interconnector – Turkey – Greece – Italy (ITGI) and the Trans Adriatic Pipeline (TAP), both of which have initial capacities of around 10 bcm/y. Also, a few days before the October 1 bidding deadline for SD2 gas, BP announced that it was giving consideration to a pipeline project that it and other Shah Deniz partners would back, the South East Europe Pipeline (SEEP), which would also have a 10 bcm/y initial capacity and travel roughly the same route as the one proposed by Nabucco into Central Europe.

The TANAP and SEEP pipelines together would remove Nabucco as a feasible project.



Lebanon’s Speaker of Parliament Discusses Offshore Delimitation in Cyprus

by erpic-manager on March 21, 2017 in Uncategorized with No Comments

Lebanon’s Speaker of Parliament Discusses Offshore Delimitation in Cyprus
Energy Brief
3rd March 2012

Nabih Berri, leader of Lebanon’s Shia Muslim Amal party and Speaker of the Lebanese parliament, arrived in Cyprus on February 29 to discuss the pending maritime delimitation agreement with Cypriot officials and the development of natural gas resources in the East Mediterranean.

Lebanon and Cyprus signed a delimitation agreement in 2007 but the Lebanese parliament has yet to ratify it primarily because of its difference with Israel over the delimitation line between those two countries. The Cyprus House of Representatives has ratified the agreement.

The separate claims by Lebanon and Israel for their respective exclusive economic zones (EEZs) overlap in an area that covers around 850 square kilometers. Both countries have filed claims with the UN, declaring the coordinates for their offshore territories.

Cyprus, which signed a maritime delimitation agreement with Israel in December 2010 and is now negotiating a unitization agreement with Israel, has been drawn into the dispute due to the fact that the difference between Lebanon and Israel lies with the determination of an offshore tripartite point. Lebanon claims that the point should be one identified as Point 23, while the tripartite point in the Cyprus-Israel agreement is Point 1, which is to the north of Point 23.

While in Cyprus, Mr. Berri said that the problem was not between Lebanon and Cyprus, but between Lebanon and Israel, and added that if the difference between those two Levant states could be resolved, the Lebanese parliament would ratify the agreement with Cyprus “within 15 days.”

Several significant gas discoveries have been made by Noble Energy in the Israeli offshore, notably the Tamar and Leviathan gas fields, with reserves of 9.1 trillion cubic feet and 17-20 trillion cubic feet respectively. In December, Noble announced the discovery of the 7 trillion cubic feet Aphrodite field in Cyprus’ Block 12.

Noble and its Israeli partner Delek Group proposed last year the construction of a 15 million tons/year LNG facility in Cyprus that would process and export Israeli and Cypriot gas. Israeli Prime Minister Benjamin Netanyahu visited Nicosia in mid-February, two weeks before Mr. Berri’s arrival, to discuss energy cooperation with the Cypriot President and other officials.

Lebanese politicians have claimed that the Leviathan gas field extends into the Lebanese EEZ and accused Israel of attempted to usurp Lebanon’s natural resources.

Meanwhile, Lebanon’s Minister of Energy and Water Jibran Basil on March 1 urged the Lebanese cabinet to take urgent steps to form the Petroleum Administration, which is necessary if the country is to launch its first bidding round. Under Lebanon’s hydrocarbon law, which was passed in 2010, the Petroleum Administration is to administrate the country’s oil and gas resources. The administration was due to be formed by the end of last year, and in January the cabinet issued a decree sanctioning its formation. However, the country’s bureaucracy is apparently making the formation of the group difficult.

Mr. Basil had during 2011 stated on several occasions that Lebanon would launch a licensing round in the first quarter of 2012. Now it appears that that endeavor will be delayed and perhaps launched during the first half of this year.


Greece Gears Up for Hydrocarbon Search

by erpic-manager on March 21, 2017 in Uncategorized with No Comments

Greece Gears Up for Hydrocarbon Search
Energy Brief
11th March 2012

Greece has received bids from eight geological survey companies to conduct seismic exploration in the country’s western and southern seas, the Greek Ministry of Energy announced in early March. The move is seen as an attempt by Athens to finally get its hydrocarbon industry moving in light of the recent discoveries in the eastern Mediterranean.

The geological surveys are to be carried out in the Ionian Sea and in the waters south of Crete covering an area of around 220,000 square kilometers. The region is estimated to hold several hundred million barrels of hydrocarbons according to data that was previously gathered.

Greek Energy Minister George Papaconstantinou said the response to the tender had exceeded the country’s expectations. The companies that have bid for the tenders include the world’s major hydrocarbon survey firms: ION Geophysical of the US, TGS – NOPEC, Dolphin Geophysical and Petroleum Geo – Services (PGS) of Norway, CGG Veritas of France, Spec Partners, Spectrum Geo Ltd and Fugro Multiclient Services.

As many as three contracts are expected to be awarded in April and survey work is slated to begin shortly thereafter. Greece is then expected to delineate up to 15 blocks and introduce a licensing round before the end of the year.

Mr. Papaconstantinou said more tenders for onshore seismic surveys would be issued by July. Furthermore, tenders have been opened for exploration work in the areas of Patras, Katakolo and Ioannina. Greek company Energean is currently working in the Prinos oil fields in the Gulf of Kavala.

The development of its own energy resources could dent Greece’s energy costs which currently amount to €10 – 12 billion, some 5% of its gross domestic product (GDP). Greece is in the midst of a financial crisis with accumulated debt of some €350 billion. The situation has moved it to privatize its natural gas company DEPA and the gas transport and service company DEFSA.

The energy minister also said that Greece would take steps to identify its offshore exclusive economic zone (EEZ) in accordance with the UN Convention on the Law of the Sea (UNCLOS). “In no way is Greece willing to not exercise all its sovereign rights and these include EEZs. EEZs are a tool Greece intends to use, in line with its overall policy,” Mr. Papaconstantinou said in late February.

Greece plans to negotiate a maritime delimitation agreement with Albania and Italy in the Ionian Sea and with Egypt and Libya regarding the Mediterranean south of Crete. Negotiations with Turkey on the issue of the Aegean Sea territories are expected to be difficult as Ankara is not a signatory to UNCLOS. Turkey has made claims on parts of the Aegean and has expressed its opposition on numerous occasions to the creation of an EEZ in Cypriot waters and exploration work carried out there by the US company Noble Energy. In December last year, Noble announced the discovery of 5 – 8 trillion cubic feet of natural gas in Block 12, near to significant discoveries made by the company in Israeli waters.

Energy cooperation between Greece, Cyprus and Israel has grown over the last two years during the course of natural gas discoveries in the eastern Mediterranean. The three plan to sign a memorandum of understanding on energy cooperation by the end of March.

Cyprus and Israel have already taken strides towards energy cooperation in joint offshore development, with a joint LNG facility proposed for construction on the southern coast of the island. The Israel Electric Corporation (IEC) and DEH Quantum Energy, a Cypriot – Greek joint venture, in early March signed an MOU regarding a feasibility study to lay an electricity cable between the two countries. The project’s cost is estimated at €500 billion. The plan calls for the cable to eventually be extended to Crete and from there connected with Greece’s national electric grid.



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